“born In Iniquity”

Running the long-lived Louisiana Lottery was as certain a moneymaker as owning the mint

The Victorians regarded their times, quite correctly, as a great age of reform. They abolished slavery. They spread public education throughout the country. They began the march down the road to women’s rights.

But there is one great nineteenthcentury reform that, uniquely, is being rapidly and wholly reversed at the end of the twentieth: the crusade against gambling. Legal gambling was nearly extinguished in this country before the First World War. But in 1992 Americans paid about thirty billion dollars to gambling concerns for the privilege of betting, more than was spent on movie tickets, recorded music, amusement parks, and books combined.

Casinos, not legal even in Nevada until 1931, are now found in New Jersey and, thanks to a quirk in federal law, on a rapidly growing number of Indian reservations as well. New York City has been running a string of bookie joints (decorously called off-track betting parlors) for more than twenty years.

The reason the states are once again permitting, indeed encouraging, gambling is simple enough: money. Legal gambling produces huge revenue streams for the state governments with very little public resistance. There is no such thing as a popular tax, but citizens by the million stand in line for the privilege of feeding silver dollars into a slot machine.

But while casinos are more and more common, the most ubiquitous form of legal gambling by far is the lotteries now run by more than thirty states. New York’s, to give just one example, is the state’s fourth-largest source of revenue.

Lotteries have a long American history. Indeed, they helped found this country. In 1612 the proprietors of the Virginia Company, desperate for a means of raising capital for their fledgling enterprise in Jamestown, petitioned King James I for permission to run a lottery. It was successful and so respectable that two of the eight prizes were won by church parishes.

Many of the colleges and universities founded in the American colonies, including Yale and Princeton, were originally funded in part by lotteries. Soon states were chartering permanent lotteries in order to take a cut of the proceeds. In 1833 the city of Philadelphia, with a population of fewer than a hundred thousand, had more than two hundred lottery offices.

But there was always a big problem with lotteries. Alexander Hamilton, perhaps not surprisingly, laid down the vital principles for a successful one. The first was simplicity. There must be few “obstacles between hope and gratification,” he wrote. The other was that the tickets had to be cheap. “Every body, almost, can and will be willing to hazard a trifling sum for the chance of considerable gain.”

The same is true of casinos and horse racing, of course. But in those instances the winning bets are paid off seconds or minutes after they are made. Lotteries in the nineteenth century, however, often sold tickets for months before a drawing, and vast pools of money accumulated. It is human nature that when there is a lot of money lying around with uncertain ownership, it is likely to be stolen. The first American lotteries were often very corrupt.

As early as 1812 Massachusetts authorized a lottery to raise $16,000 to repair Plymouth Beach. Nine years later, although 111,800 tickets had been sold and $886,439 had been raised, only $9,876 had been turned over to repair the beach. The rest had just melted away, like a wave on the sand.

As a result, beginning in the 1830s, as the Industrial Revolution began transferring power to a new, morally prim and proper middle class—the Victorians—statechartered lotteries began to disappear. By the start of the Civil War, only Kentucky and Missouri still had legal ones in operation.

Then, shortly after the war ended and while Louisiana was still under federal control, the state legislature established a new lottery. It was, as one writer described it, “born in iniquity.”

The Louisiana State Lottery Company was a private corporation. It was required to make an annual forty-thousand-dollar payment to the Charity Hospital of New Orleans but was not otherwise taxed by the state. It was the brainchild of two men, neither of them even native Louisianians. Charles T. Howard was born in Baltimore and originally went to New Orleans in 1852 as the agent for the Alabama lottery. His partner was John A. Morris from New York. The Morris family is one of New York’s oldest. Its large landholdings, called Morrisania, gave a part of the Bronx its name and the family its original fortune. One of the clan, Gouverneur Morris, played a very important role in the creation of the Constitution. (Vastly enriched by the Louisiana Lottery, the family is still prominent in New York and has the distinction of owning the oldest registered racing silks in America.) John Morris went south after graduating from Harvard, and he married the daughter of a state judge, one of the few of the antebellum aristocracy to remain wealthy after the war.

He used his political connections to create one of the great cash cows in American history. Just consider. The average state lottery today pays out about forty-five dollars in prizes for every one hundred it takes in. It spends a few percentage points more on administration and pockets the rest. A profit margin reaching 50 percent of gross revenue is nice work if you can get it. John A. Morris and Charles Howard got it.